Because the general prospects of the enterprise carry major weight in the establishment of market prices , it is natural for the security analyst to devote a great deal of attention to the economic position of the industry and of the individual company in its industry . Studies of this kind can go into unlimited detail . They are sometimes productive of valuable insights into important factors that will be operative in the future and are insufficiently appreciated by the current market . Where a conclusion of that kind can be drawn with a fair degree of confidence , it affords a sound basis for investment decisions .
The material developed is ordinarily of a kind with which the public is already fairly familiar and that has already exerted considerable influence on market quotations . Rarely does one find a brokerage house study that point out with a convincing array of facts that a popular industry is heading for a fall or that an unpopular one is due to prosper . Wall street's view of the longer future is notoriously fallible and this necessarily applies to that important part of its investigations which is directed toward the forecasting of the course of profits in various industries .
The rapid and pervasive growth of technology in recent years is not without major effect on the attitude and the labors of the security analyst . More so than in the past , the progress or retrogression of the typical company in the coming decade may depend on its relation to new products and new processes which the analyst may have a chance to study and evaluate in advance . Thus there is doubtless a promising area for effective work by the analyst based on field trips, interviews with research men and on intensive technological investigation on his own .
There are hazards connected with investment conclusions derived chiefly from such glimpses into the future and not supported by presently demonstrable value . Yet there are perhaps equal hazards in sticking closely to the limits of value set by sober calculations resting on actual results . The investor cannot have it both ways . He can be imaginative and play for the big profits that are the reward for vision proved sound by the event but then he must run a substantial risk of major or minor miscalculations or he can be conservative and refused to pay more than a minor premium for possibilities as yet unproved but in that case he must be prepared for the later contemplation of golden opportunities foregone .
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